Intraday Market Update
US equities gapped open higher this morning but quickly closed the gap as traders try to decipher through a mixed bag of economic data. A slew of retailers reported same store sales that were all over the board while weekly jobless claims were slightly better than expected. The major indexes are trading in the middle to lower end of their daily range and teetering between positive and negative territory. The DJIA and Russell 2000 are leading while the NASDAQ 100 is lagging. The 10-year US Treasury yield is back above 3% which seems to be supporting further declines in equities, at least for now. The best performing sectors are oil and transportation while the worst performing sectors are gold miners, home construction, and semiconductors. International markets were mostly higher on Thursday. The biggest winners were Japan's Nikkei Index tacking on +2.76% and London's FTSE 100 gaining +1.81%.

The IMF raised its 2010 global growth forecast by projecting the world economy will grow by +4.6%, citing stronger than expected activity during the first half of the year. In April the IMF projected 2010 growth of +4.2%. The raised forecast comes mostly from better expectations among emerging markets, especially the BRIC countries. However, the IMF warned that the ramifications of the European debt problems are dampening the global recovery and that the spillover to other countries and regions could be substantial. The IMF raise its US GDP outlook from +3.1% to +3.3% and stated that the US economic recovery has been stronger than expected. But once again they also offered cautious comments by warning of a "double-dip" in the US housing market.

On the retail front there were a slew of retailers reporting same store sales (SSS) numbers this morning. Some retailers knocked the cover off the ball while others missed badly. However, considering the depressed levels from June 2009 the year over year comparisons should cause concern due to the lack of growth. Overall the retail sector, like the non-manufacturing economy in general, appears to have lost steam. Here are the highlights: SSS by The Gap (0% vs. 3.4%e) and TJX Companies (3.0% vs. 4.1%e) missed big and their stocks are getting punished, down -8.0% and -5.0% respectively. Others missing estimates included competitors Target (TGT: -1.50%), BJ's Wholesale (BJ: +0.70%), and Costco (COST: +1.0%), while mall names American Eagle (AEO: -5.0%), Hot Topic (+1.75%) and The Gap (GPS: -8.0%) all missed as well. Nordstrom was well above estimates (14.1% vs. 9.8%e) and opened more than +5% higher but all of the gains have been erased and the stock is down - 2.0%. Other names beating estimates include Abercrombie & Fitch (ANF: +8.0%) and JC Penny (JCP: +6.0%).

The weekly jobless claims report declined -21,000 to 454,000 versus last week's report that was revised higher by +3,000 to 475,000. Estimates called for claims to decrease to 460,000. The four-week moving average declined by -1,250 to 466,000 and continuing claims were sharply lower by -224,000 to 4,413,000. Estimates called for a decline to 4,600,000. The drop in continuing claims can be attributed some new hiring but also the expiration of unemployment benefits.

Front month crude is hanging on to gains after a smaller than expected build in weekly inventories. Conversely, natural gas is declining after a larger than expected build in weekly inventories.

Core Sector List:
Overall reading: 9 sectors advancing, 7 sectors declining
Strongest Sectors: Oil, Transportation, Biotechnology
Weakest Sectors: Home Construction, Gold Miners, Semiconductors

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